v. ORDER FOR PERMANENT Plaintiff, Attorneys for the … 3:12-cv-00105-LRH -VPC Document 3-1 Filed...

Case 3:12-cv-00105-LRH -VPC Document 3-1 Filed 02/23/12 Page 1 of 34

TONY WEST Assistant Attorney General Civil Division U.S. Department of Justice

ALAN PHELPS Trial Attorney Consumer Protection Branch U.S. Department of Justice P.O. Box 386 Washington, D.C. 20044 Tel: 202-307-6154 Fax: 202-514-8742 Email: [email protected]

Attorneys for the United States.

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA

UNITED STATES OF AMERICA,

Plaintiff,

v.

BRIAN EBERSOLE, individually and as officer of B2B VOICE BROADCASTING, INC. and VOICE MARKETING, INC.;

VOICE MARKETING, INC., and

B2B VOICE BROADCASTING, INC.;

Defendants.

Case No. 3:12-cv-OOl05

STIPULATED JUDGMENT AND ORDER FOR PERMANENT INJUNCTION

Page 1 of20


Plaintiff, the United States of America, acting upon notification and authorization to the

Attorney General by the Federal Trade Commission ("Commission"), has commenced this action

by filing the complaint, and Defendants have waived service of the summons and the complaint.

The parties, represented by the attorneys whose names appear hereafter, have agreed to

settlement of this action without adjudication of any issue of fact or law and without Defendants

admitting liability for any of the violations alleged in the complaint. This document shall not be

considered a finding of wrongdoing by Defendants for any purposes, whatsoever.

THEREFORE, on the joint motion of the parties, it is ORDERED, ADJUDGED, AND

DECREED as follows:

FINDINGS

1. This Court has jurisdiction over the subject matter and the parties pursuant to 28 U.S.C.

§§ 1331, 1337(a), 1345 and 1355, and 15 U.S.C. §§ 45(m)(1)(A), 53(b), and 56(a).

2. Venue is proper as to all parties in this District.

3. The activities of Defendants are in or affecting commerce, as defined in Section 4 of the

Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 44.

4. The complaint states a claim upon which relief may be granted against Defendants, under

Sections 5(a), 5(m)(1)(A), and 13(b) of the FTC Act, 15 U.S.c. §§ 45(a), 45(m)(1)(A),

and 53(b).

5. Defendants have entered into this Stipulated Judgment and Order for Permanent

Injunction ("Order") freely and without coercion. Defendants further acknowledge that

they have read the provisions of this Order and are prepared to abide by them.

Page 2 of20


6. Plaintiff and Defendants waive all rights to appeal or otherwise challenge or contest the

validity of this Order.

7. Defendants have agreed that this Order does not entitle Defendants to seek or to obtain

attorneys' fees as a prevailing party under the Equal Access to Justice Act, 28 U.S.C.

§ 2412, and Defendants further waive any rights to attorneys' fees that may arise under

said provision of law.

8. Entry of this Order is in the public interest.

DEFINITIONS

For the purpose of this Order, the following definitions shall apply:

1. "Asset" and "Assets" mean any legal or equitable interest in, right to, or claim to, any

real or personal property, including, but not limited to, "goods," "instruments,"

"equipment," "fixtures," "general intangibles," "inventory," "checks," or "notes," (as

these terms are defined in the Uniform Commercial Code), lines of credit, chattels,

leaseholds, contracts, mail or other deliveries, shares of stock, lists of consumer names,

accounts, credits, premises, receivables, funds, and all cash, wherever located.

2. "Assisting other persons" means providing any of the following goods or services to

another person while knowing or consciously avoiding knowing that the person receiving

assistance is engaged in an act or practice that is prohibited by this Order: (i) serving as

an officer, director, or consultant; (ii) initiating telephone calls for the purpose of

delivering recorded messages; (iii) providing or arranging for access to software,

equipment that dials stored or generated telephone numbers, or telecommunications

Page 3 of20


services for the purpose of initiating telephone calls that deliver recorded messages; (iv)

providing or arranging for access to services that permit alteration of the name of the

calling party displayed by caller identification services; (v) providing or acquiring lists of

names or telephone numbers for the purpose of contacting persons on the list by

telephone; (vi) formulating or providing, or arranging for the formulation or provision of,

any script or any other material for communicating with customers or potential

customers; or (vii) providing any other substantial help or aid.

3. "Caller identification service" means a service that allows a telephone subscriber to

have the telephone number, and, where available, name of the calling party transmitted

contemporaneously with the telephone call, and displayed on a device in or connected to

the subscriber's telephone.

4. "Charitable contribution" means any donation or gift of money or any other thing of

value.

5. "Corporate Defendants" means Voice Marketing, Inc., a Colorado corporation, its

successors and assigns,and B2B Voice Broadcasting, Inc., a Nevada corporation, its

successors and assigns.

6. "Defendants" means Voice Marketing, Inc., B2B Voice Broadcasting, Inc., and Brian

Ebersole, individually, collectively, or in any combination.

7. "Do Not Call request" means a statement by a person that indicates that he or she does

not wish to receive telephone calls initiated to induce the purchase of goods or services or

to solicit charitable contributions.

Page 4 of20


8. "Established business relationship" means a relationship between the seller and a

person based on: (a) the person's purchase, rental, or lease of the seller's goods or

services or a financial transaction between the person and seller, within the eighteen (18)

months immediately preceding the date of the telemarketing call; or (b) the person's

inquiry or application regarding a product or service offered by the seller, within the three

(3) months immediately preceding the date of a telemarketing call.

9. "National Do Not Call Registry" means the National Do Not Call Registry, which is the

"do-not-call" registry maintained by the Commission pursuant to 16 C.F.R. §

31 O.4(b)(1 )(iii)(B).

10. "Outbound telephone call" means a telephone call initiated by a telemarketer to induce

the purchase of goods or services or to solicit a charitable contribution.

11. "Person" means any individual, group, unincorporated association, limited or general

partnership, corporation, or other business entity.

12. "Representatives" means Defendants' officers, agents, servants, employees, attorneys,

and those persons in active concert or participation with them who receive actual notice

of this Order by personal service or otherwise.

13. "Seller" means any person who, in connection with a telemarketing transaction, provides,

offers to provide, or arranges for others to provide goods or services to the customer in

exchange for consideration, whether or not such person is under the jurisdiction of the

Commission.

Page 5 of20


14. "Subscriber" means any person that, for consideration, authorizes Defendants to initiate,

or arranges for Defendants or their Representatives to assist others in initiating, multiple

telephone calls for the purpose of delivering recorded messages, but does not include a

person that purchases the right to use software and receives no other good or service from

Defendants.

15. "Telemarketer" means any person who, in connection with telemarketing, initiates or

receives telephone calls to or from a customer or donor.

16. "Telemarketing" means a plan, program, or campaign which is conducted to induce the

purchase of goods or services or a charitable contribution, by use of one or more

telephones and which involves more than one interstate telephone call. Telemarketing

does not include the solicitation of sales through the mailing of a catalog as set forth in 16

c.P.R. § 310.2(dd) or any other act or practice exempted by 16 C.P.R. § 310.6.

17. "Telemarketing Sales Rule" means the Commission rule titled "Telemarketing Sales·

Rule," 16 C.P.R. Part 310, attached as Appendix A, or as amended.

ORDER

I. PROHIBITION AGAINST ILLEGAL TELEMARKETING PRACTICES

IT IS ORDERED that, in connection with telemarketing, Defendants and their

Representatives, whether acting directly or through any entity, corporation, subsidiary, division,

affiliate, or other device, are permanently restrained and enjoined from engaging in, causing other

persons to engage in, and assisting other persons to engage in, violations of the Telemarketing

Sales Rule, including, but not limited to:

Page 6 of20


A. Initiating any outbound telephone call to any person at a telephone number on the

National Do Not Call Registry unless the seller proves that:

1. the seller has obtained the express agreement, in writing, of such person to place

calls to that person. Such written agreement shall clearly evidence such person's

authorization that calls made by or on behalf of a specific party may be placed to

that person, and shall include the telephone number to which the calls may be

placed and the signature of that person; or

2. the seller has an established business relationship with such person and that

person has not previously stated that he or she does not wish to receive outbound

telephone calls made by or on behalf of the seller;

B. Abandoning, or causing others to abandon, any outbound telephone call to a person by .

failing to connect the call to a live operator within two seconds of the person's completed

greeting, unless Defendants or their Representatives prove that the following four

conditions are met:

1. Defendants and their Representatives employ technology that ensures

abandonment of no more than three percent of all calls answered by a person,

measured over the duration of a single calling campaign, if less than thirty days, or

separately over each successive 30-day period or portion thereof that the campaign

continues;

Page 7 of20


2. Defendants and their Representatives, for each telemarketing call placed, allow

the telephone to ring for at least fifteen seconds or four rings before disconnecting

an unanswered call;

3. Whenever a live operator is not available to speak with the person answering the

call within two seconds after the person's completed greeting, Defendants or their

Representatives promptly playa recorded message that states the name and

telephone number of the seller on whose behalf the call was placed; and

4. Defendants or their Representatives retain records, in accordance with 16 C.F.R. §

310.5 (b )-( d), establishing compliance with the preceding three conditions;

C. Initiating any outbound telephone call that delivers a prerecorded message to induce the

purchase of any good or service, other than a prerecorded message permitted for

compliance with the call abandonment safe harbor in 16 C.F.R. § 31 O.4(b)( 4)(iii), unless:

1. prior to making any such call, the seller has obtained from the recipient of the call

an express agreement, in writing, that:

a. the seller obtained only after a clear and conspicuous disclosure that the·

purpose of the agreement is to authorize the seller to place prerecorded

calls to such person;

b. the seller obtained without requiring, directly or indirectly, that the

agreement be executed as a condition of purchasing any good or service;

c. evidences the willingness of the recipient of the call to receive calls that

deliver prerecorded messages by or on behalf of a specific seller; and

Page 8 of20


d. includes such person's telephone number and signature; or

2. The telephone call delivers a prerecorded healthcare message made by, or on

behalf of, a covered entity or its business associate, as those terms are defined in

the HIPPA Privacy Rule, 45 C.F.R. 160.103;

D. Failing to disclose truthfully, promptly, and in a clear and conspicuous manner the

identity of the seller, that the purpose of the call is to sell goods or services, and the

nature of the goods or services; and

E. Failing to transmit or cause to be transmitted to any caller identification service in use by

a recipient of a telemarketing call either: (i) the telephone number of the telemarketer

making the call and the name of the telemarketer; or (ii) the telephone number for

customer service of the seller on whose behalf the call is made and the name of the seller.

Provided, however, that the requirements of this section do not apply to the solicitation of sales

by mailing a catalog as set forth in 16 C.F.R. § 310.2(dd) or any other act or practice exempted

by 16 C.F.R. § 310.6 and,providedfurther that if the Commission promulgates rules that, in

whole or part, modify or supersede the Telemarketing Sales Rule, then, on and after the effective

date of any such rules, (1) Defendants and their Representatives shall comply fully and

completely with all applicable requirements of such rules and (2) telephone calls that are

permitted by such rules do not constitute a violation of this Order if Defendants and their

Representatives satisfy all the applicable requirements of such rules.

Page 9 of20


II. DISTRIBUTION OF ORDER BY DEFENDANTS, ACKNOWLEDGMENTS OF RECEIPT, AND TERMINATION OF NONCOMPLIANT

SUBSCRIBERS

IT IS FURTHER ORDERED that:

A. Defendants shall, within thirty (30) days ofthe entry ofthis Order, provide a copy of this

Order including Appendix A to all of their owners, principals, members, officers, and

directors, as well as managers, agents, servants, employees, and attorneys having

decision-making authority with respect to the subject matter of this Order; secure from

each such person a signed statement acknowledging receipt of a copy of this Order; and

shall, within ten (10) days of complying with this Paragraph, file an affidavit with the

Court and serve the Commission, by sending a copy thereof by overnight courier, to the

Associate Director for Enforcement, Federal Trade Commission, setting forth the fact and

manner of their compliance, including the name and title of each person to whom a copy

of the Order has been provided. Provided that, in lieu of overnight courier, Defendants

may serve the Commission with the affidavit by first-class mail, but only if they

contemporaneously send an electronic version to the Commission at [email protected].

B. Defendants shall, within ten (10) days ofthe date of this Order, review all the messages

that subscribers deliver with the assistance of Defendants or their Representatives and, for

each subscriber that delivers a message to businesses or consumers that promotes the

purchase of goods or services or solicits charitable contributions, Defendants or their

Representatives shall, within thirty (30) days of the ently of this Order:

Page 10 of20


1. Provide the subscriber with: (i) a copy of this Order, including Appendix A; and

(ii) a written notice stating that the use of Defendants' services to cause the

initiation of telephone calls that do not comply with this Order will result in

immediate termination of services; and

2. Obtain from each such subscriber a signed and dated statement acknowledging

receipt of this Order and the written notice concerning immediate termination of

servlces.

C. Prior to commencing services that assist subscribers or prospective subscribers in

delivering a message to businesses or consumers that was not reviewed under

Subparagraph B, Defendants shall review the message and, if the message promotes the

purchase of goods or services or solicits charitable contributions and the subscriber or

proposed subscriber seeking to deliver the messages has not previously provided a

statement acknowledging receipt ofthis Order, Defendants or their Representatives shall:

1. Provide each such subscriber or prospective subscriber with: (i) a copy of this

Order, including Appendix A; and (ii) a written notice stating that the use of

Defendants' services to cause the initiation of telephone calls that do not comply

with this Order will result in immediate termination of services; and

2. Obtain from each such subscriber or prospective subscriber a signed and dated'

statement acknowledging receipt of this Order and the written notice concerning

immediate termination of services.

D. Defendants shall:

Page 11 of20


1. Terminate services to any subscriber immediately upon discovering that a

subscriber has used the services of Defendants or their Representatives to initiate

or cause the initiation of telephone calls that do not comply with this Order;

2. Refuse to provide services to any prospective subscriber if such services would

assist or support the initiation of telephone calls that do not comply with this

Order; and

3. Provide a copy of this Order (including Appendix A) to any person that purchases

the right to use software to initiate telephone calls to deliver prerecorded messages

and receives no other good or service from Defendants.

III. CIVIL PENALTY

IT IS FURTHER ORDERED that:

A. Judgment in the amount of two million dollars ($2,000,000) is entered against

Defendants, jointly and severally, as a civil penalty, pursuant to Section 5(m)(1)(A) of the

FTC Act, 15 U.S.C. § 45(m)(1)(A). Upon payment to the Treasurer of the United States

of the amount provided in Subparagraph III.B, the remainder ofthe civil penalty

judgment shall be suspended subject to the conditions set forth in Subparagraph III.C of

this Order.

B. Defendants and their attorneys represent that, prior to or concurrently with their execution

of this Order, Defendants have transferred Ten Thousand Dollars ($10,000), as non

suspended civil penalty payment, to their attorney, who shall hold the entire sum for no

purpose other than payment to the Treasurer of the United States after entry of this Order

Page 12 of20


by the Court. Within five (5) days of receipt of notice ofthe entry of this Order,

Defendants' attorney shall transfer such civil penalty payment in the form of a wire

transfer payable to the Treasurer of the United States. Written confirmation of the wire

transfer shall be delivered to: Director, Consumer Protection Branch, U.S. Department of

Justice, Civil Division, P.O. Box 386, Washington, DC 20044. The cover letter

accompanying the written confirmation shall include the title of this litigation and a

reference to DJ# 102-3721. Such transfer by Defendants' attorney shall constitute

satisfaction of the portion of the judgment that is not suspended pursuant to this Order.

C. Plaintiffs and the Commission's agreement to this Order is expressly premised upon the

truthfulness, accuracy and completeness of Defendants' sworn financial statements and

supporting documents submitted to the Commission, namely those of B2B Voice

Broadcasting, Inc., signed by Brian Ebersole and dated July 29, 2011, the sworn financial

statement of Brian Ebersole, signed and dated August 22, 2011, and the tax returns for

Brian Ebersole, B2B Voice Broadcasting, Inc., and Voice Marketing, Inc., for 2008

through 2010, which include material information upon which Plaintiff and the

Commission relied in negotiating and agreeing to this Order. If, upon motion by Plaintiff,

this Court finds that Defendants' financial statements and related documents failed to

disclose any material asset or materially misstated the value of any asset, or made any

other material misstatement or omission, the Court shall lift the suspension of the

judgment and require payment of civil penalty in the full amount of the $2,000,000

judgment less all amounts paid to the Treasurer of the United States pursuant to

Page 13 of20


Subparagraph III.B. Provided, however, that in all other respects this Order shall remain

in full force and effect, unless otherwise ordered by the Court. Proceedings instituted

under this Paragraph are in addition to, and not in lieu of, any other civil or criminal

remedies that may be provided by law, including any other proceedings the Plaintiff may

initiate to enforce this Order.

D. Upon entry of this judgment, Defendants relinquish all dominion, control, and title to the

funds paid to the fullest extent permitted by law. Defendants shall make no claim to or

demand for return of the funds, directly or indirectly, through counselor otherwise.

E. Defendants agree that the facts as alleged in the complaint filed in this action shall be

taken as true, without further proof, in any subsequent civil litigation by Plaintiff or the

Commission to enforce its rights to any payment or money judgment pursuant to this

Order. Defendants agree that the judgment represents a civil penalty owed to the United

States Government, is not compensation for actual pecuniary loss, and, therefore, as to

Defendant Brian Ebersole is not subject to discharge under the Bankruptcy Code pursuant

to 11 U.S.C. § 523 (a)(7).

F. In accordance with 31 U.S.C. § 7701, Defendants are required, unless they have done so

already, to furnish to Plaintiff and the Commission their taxpayer identifying numbers.

These numbers may be used for purposes of collecting and reporting on any delinquent

amount arising out of Defendants' relationship with the government.

G. In the event of default on the payment required to be made by Subparagraph III.B, the

entire judgment, together with interest computed under 28 U.S.C. § 1961 - accrued from

Page 14 of20


the date of default until the date of payment - shall be due and payable. Defendants shall

cooperate fully with Plaintiff and the Commission and their agents in all attempts to

collect the amount due pursuant to this Paragraph if Defendants fail to pay fully the

amount due at the time specified herein. In that event, Defendants agree to provide

Plaintiff and the Commission with their federal and state tax returns for the preceding two

years, and to complete new standard-form financial disclosure forms fully and accurately

within ten (10) business days of receiving a request from Plaintiff or the Commission to

do so. Defendants further authorize Plaintiff and the Commission to verifY all

information provided on their financial disclosure forms with all appropriate third parties,

including, but not limited to, financial institutions.

IV. RECORD KEEPING PROVISIONS

IT IS FURTHER ORDERED that for a period of ten (10) years from the date of entry

of this Order, each Defendant shall maintain and make available to the Plaintiff or Commission,

within seven (7) days of the receipt of a written request, business records demonstrating

compliance with the terms and provisions of this Order.

V. NOTIFICATION OF BUSINESS CHANGES

IT IS FURTHER ORDERED that each Corporate Defendant shall notifY the Associate

Director for Enforcement, Federal Trade Commission, at least thhiy (30) days prior to any

change in its business, including, but not limited to, merger, incorporation, dissolution,

assignment, and sale that results in the emergence of a successor corporation, the creation or

Page 15 of20


dissolution of a subsidiary or parent, or any other change that may affect its obligations under this

Order.

VI. NOTIFICATION OF INDIVIDUAL'S AFFILIATIONS

IT IS FURTHER ORDERED that Brian Ebersole shall, for a period often (10) years

from the date of entry of this Order, notify the Associate Director for Enforcement, Federal Trade

Commission, within thirty (30) days of his affiliation with a new business or employment whose

activities include telemarketing, or of his affiliation with a new business or employment in which

his own duties and responsibilities involve the sale or offering for sale of goods or services.

VII. NOTICES

IT IS FURTHER ORDERED that, for the purposes of this Order, Defendants shall,

unless otherwise directed by the Commission's authorized representatives, send by overnight

courier (not the U.S. Postal Service) all notifications to the Associate Director for Enforcement

required by this Order and documents that must be served upon the Associate Director for

Enforcement to:

Associate Director for Enforcement Bureau of Consumer Protection Federal Trade Commission 600 Pennsylvania Avenue, N.W. Washington, D.C. 20580 RE: United States v. Brian Ebersole, et al.

Provided that, in lieu of overnight courier, Defendants may send such notifications by first-class

mail, but only if Defendants contemporaneously send an electronic version of such report or

notification to the Commission at [email protected].

Page 16 of20


VIII. COMMUNICATION WITH DEFENDANTS

IT IS FURTHER ORDERED that for the purposes of compliance reporting, if

undersigned counsel no longer represents a Defendant, Plaintiff and the Commission are

authorized to communicate directly with that Defendant.

IX. FEES AND COSTS

IT IS FURTHER ORDERED that each party to this Order agrees to bear its own costs

and attorneys' fees incurred in connection with this action.

X. SEVERABILITY

IT IS FURTHER ORDERED that the provisions of this Order are separate and

severable from one another. If any provision is stayed or determined to be invalid, the remaining

provisions shall remain in full force and effect.

XI. RETENTION OF JURISDICTION

IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for

purposes of construction, modification, and enforcement of this Order.

II

II

II

Page 17 of20


XII. COMPLETE SETTLEMENT

The parties, by their respective counsel, consent to entry of the foregoing Order, which

shall constitute a final judgment and order in this matter. The parties further stipulate and agree

that the entry of the foregoing Order shall constitute a full, complete, and final settlement of this

action.

JUDGMENT IS THEREFORE ENTERED in favor of Plaintiff and against

Defendants, pursuant to all the terms and conditions recited above.

SO ORDERED this _ day of ______ , 2012.

UNITED STATES DISTRICT JUDGE

Page 18 of20


The parties, by their respective counsel, consent to the terms and conditions of the Stipulated

Judgment and Order for Permanent Injunction as set forth above and consent to the entry thereof.

FOR THE PLAINTIFF:

TONYV'lEST Assistant Attorney General Civil Division U.S. DEPARTM.ENT OF mSTICE

MAAME EWUSI-MENSAH FRIMPONG Acting Deputy Assistant Attorney General Civil Division

MICHAEL S. BLUME Director Consumer Protection Branch

KENNETH L. JOST

Tri Attorney Consumer Protection Branch U.S. Department of Justice P.O. Box 386 Washington, D.C. 20044 Tel: 202-307-6154 Fax: 202-514-8742 Email: [email protected]

FOR THE FEDERAL TRADE COMMISSION:

LOIS C. GREISMAl'J Associate Director for Marketing Practices FEDERAL TRADE COMMISSION

IJLv.~ MICHAEL TANKERSLEY WILLIAM T. MAXSON Federal Trade Commission 600 Pennsylvania Ave., N.W. Washington, DC 20580

Page 19 of20


FOR DEFENDANTS:

William Raney Copilevitz and Canter, LLC 310 W. 20th 81., 8te. 300 Kansas City, Missouri 64108 816-277-0856

Page 20 of20 8-£-2011


APPENDIX A Telemarketing Sales Rule

pt. 310

PART 31o-TELEMARKETING SALES RULE 16 CFR PART 310

Seo. 310.1 Soope of regulations in tbis Pa.J:t. 310.2 DefinitioDB. 310.3 Deceptive telemarketing acts or prac

tices. 310.4 Abusive telemarketing acta or prac-

tices. 310.5 Eeoordke.ping requirements. 310.6 Exemptlona. 310.7' Aotions by states and privi1.ta parsons.

16 CFR Ch. I (1-1-11 Edition)

310.8 'Fee for aecallS to the Nat10nal Do Not Call Registry.

310.9 Saverability.

AUTIlORlTY: 15 U.S.C. 6101-6108.

SoURCE; 76 FR 48516. Aug. 10. 2010, unless otherwise noted.

§ 310.1 Scope of regulations in true pari.

This pa,rt lmplements the Telemarketing and Consumer Fraud and Abuse Prevention Aot, 15 U.S.C. 6101-6108, as amended.

362

Page 1 of!4



fe<ierai Trade Commission

§310.2 Definitions. (a) Acquirer means a busineSJ:I organi

zation, finanoial institution, or an agent of a buaIness organization 01' financial institution that bas authority from an organization that opere.tes or licenses a credit oard system to authorize merohants to accept, transmit, or prooess payment by credit oard through the credit card system for money, goods or services, or anything else of value.

(b) Attorney General meallS the ohief legal offioer of a state. . (0) Billing information means any data that enables any person to access a cuatomer's or dOllar's account, suoh as a credit oard, oheoking, savings, share or similar account, utilltybill, mortgage loan account, or debit oard.

Cd) (Jailer idenUjicq.tiO'l! servic(3 means a service that allows a telephone subsoriber to have the telephone number, and, where available, name of the calling party transmitted contemporaneously with the telephone 03011, and displayed on a device in or connected to the subsoT1ber's telepho.ne.

(e) Oardholder means a person to whom a credit oard is issued or who is authorized to use a oredit" card on behalf of or in addition to the person to whom the credit oard is issued.

(f) Oharitable contribution means any donation or gift of money or allY other thing of value.

(g) Oommission means the Federal Trade Commission.

(h) Oredit means the right granted by a creditor to a.dehtor to defer pa.yment of debt or to incur debt and defer its payment.

(i) Oredit card means any card, plate, coupon book, or other oredit device existing for the purpose of obtaining money. property, labor, or services on credit.

(j) Oredit card, sales draft means any record or evidence of a credit card transaction.

(k) Oredit carel system means any methocl or procedure used to proceSJ:I credit card transactions involving credit cards Issued or licensed by the operator of that system.

(I) Oustomer means any person who is or may be required to pay for goods or services offered through telemarketing.

§310.2

(m) Debt relief service means any program or service represented, directly or by implication, to renegotiate, BettIe, or in any way alter the terms of payment or other terms of the debt between a person and one or more unsecured creditors or debt collectors. including, but not limited to, a reduction in the balance, interest rate, or fees owed by a. person to an unsecured cred-itor or debt collector.

(n) Donor means any person soliCited to ma}!:e a oharitable contribution.

(0) Established business relationship means a relationship between a seller and a. consumer based on:

(1) the consumer's purchase, rental, or lease of the seller's goods or services or a financial transaotion between the consumer and seller, within the eighteen (18) months immediately llreceding the date of a telemarketing call; or

(2) the consumer's inquirY or application regarding a product or service offered by the seller, within the three (3) months immediately preceding the date of a telemarketing call.

(p) Free-to-pay conversion means. in a.n offer or agreement to sell or provIde any goods or services, a provision ilnder w)1ich a customer receives a produot or servIce for free for an initial period and will incur an obligation to pay for the product or servioe if he or she does not take affirmative a.ction to cancel before the end of that period.

(q) Investment opportunity means anything, tangible or intangible, that is offered. offered for sale. sold, or traded based wholly or 'in part on representations, either expreSJ:I or implied. about past, present, or ·future income, profit, or appreciation.

(I') Material means likely to affect a person's ohoice of, or conduot regarding, .goods or services or a charitable contribu tion.

(B) Merchant means a person who is authorized under a written contract with an aoqUirer to honor or accept credit carde, or to. transmit or process for payment credit oard payments, for the purChase of goods or servloes or a charitable oontrlbution.

(t) Merchant agreement means a written contract between a merchant and an aequirer to honor or accept credit cards, or to transmit or process for payment credit oard payments, for the

363

Page 2 of14


APPENDIX A Telemarketing Sales Ru1e

§31D.2

purchase of goods or services or a charitable contribution.

(u) Negative opt/on feature means. in an offer or agreement to sell or provide any goods or servioes, a provision under whioh the oustomer's silence or failure to take an affirmative aotion to reject goods or services or to ooncel the agreement is interpreted by the seller as acceptance of the offer.

(v) Outbound telephone call means a telephone call initiated by a telemarketer to induce the purchase of goods or services or to solicit a charitable contribution.

(w) Pers01l means any individual, group, unincorporated association, limited Or genera.l partnership, corporation,-or other business entity.

(x) Preacquirecl account info=tion means any information that enables a seller or telemarketer to cause a oharge to be placed against a customer's or donor's account without obtaining the account number directly from the customer or donor during 'the telemarketing transaotion pursuant to which the aocount will be charged.

(y) Prize means anything offered, 9r purportedly offered, and given. or purportedly given, to a person by chance. For purposes of this definition, chance ellists if a person is guaranteed to receive an item a.nd, at the time of the offer or purported offer, the telemarketer does not identify the speCific item that the person will receive.

(z) Prize 'PTcmwtion means: (1) A sweepstakes or other game of

chance; or (2) An oral or written express or im

plied representation tbat a person bas won. has bean selected to receive, or may be eligible to receive a prize or IluI1lorted prize.

(aa.) Seller means a.ny person who, in conneotion with a. telemarketing transaotion. provides, offera to provide, or arranges for others to provide gOOds or servioesto -the customer in exchange for consideration.

(bb) state mea.ns any atate of the United States, the District of Oolumbia, Puerto Rico, the Northern Mariana

16 CFR Ch. I (1-1-11 Edmon)

Islands, and any territOry or posseSSion of the United States.

(ce) Telemarketer means any person who. in conneotion with telemarketing, initiates or receives telephone calls to or from a oustomer or donor. '

(dd) Telemarketing means a plan, program, or oampaign whioh is conducted to induce the purohase of goods or services or a oharitable contribution, by _use of one or more telephones and which involves more than one interstate telephone 0011. The tef1ll does not include the solicitation of sales through the mailing of a. catalog which: contains a written description or illustration of the goods or services offered for sale; inoludes the business address of the seller; includes multiple pages of written material or illustra· tions; and has been issued not less frequently than once a year, when the person making the solioitation does not solicit _customers by telephone but only receives calls initiated ,by cus· tomers in response to the oatalog and dUJ'lng those calls takes orders only without further solioitation. For purposes- of the previous sentence, the term "further solicitation" does not include -providing the oustomer with information about, or attempting to sell, any other item inoluded in the same catalog whioh prompted the oustomer's call or in a substantially similar cata· log.

(ee) Upselling means soliciting the purchase of goods or services following an initial transaotion during a single telephone 0011. 'l'ho upsell Is a separate telemarketing transaotion, not a continuation of the initial transaction. An "external upsell" is a. solicitation made by or on behalf of a. seller different from the seller in the initial transaction, regardless of whether the initial transaotion and the subsequent solioitation are made by the Same telemarketer. An "internal upse11" is a so· licitation made by or on behalf of the same seller M in the initial transaotion, regardless of whether the initial transaction and subsequent solicitation are made by the same telemarketer.

364

Page 3 ofl4



Federal Trade Commission

§ 310.8 Deceptive telemarketing acts or practices.

(a) Prohibited deceptive telemarketing acts or practices. It is a deceptive telemarketing act or practice and a vtola~ tlon of this Rule for any seller or telemarketer to engage in the following conduct: '

(1) Before a customer consents to payCl59/S for goods or aervioes offered, failing to disclose truthfUlly, in a clear and conspicuous manner, the following material information:

(1) The total costs to purchase, receive, or use, and the quantity of, any goods or services that are the subjeot of the sales offer; Ge°/s

(il) All material restrictions, limitations, or oonditions to purohase, receive, or use the goods or servioes that are the subjeot of the sales offer:

(iii) If the seller has a policy of not making refunds, oanoellations, exohanges, or repurohases,' a statement infornllng the oustomer that this is the seller's policy; or, if the seller or telemarketer makes a representation about a refund, cancellation, Elxchange, or repurchase polioy, a statement of all material terms and conditions of suoh pOlicy;

(iv) In any prize promotion, the odds of being able to reoeive the prize, and, if the odds are not calculable in advance, the fa.otors llSed in caloulating the odds; that no purchase or payment is required to win a. prize or toparticipate in a prize prpmotion and that any purohase or payment will not increase the person's ohances of winning; and the no-purchase/no-payment method of

669 When a. saller or telemarketer UBBS, or directs a oustomer to use, a oourler to tra.n&port .payment, the seller or telema.rketer must ma.ka tho disolosures required by §310.S(a:)(l) before sending a courier ·to pick up payment or authorization Cor payment, or directing a customer to have a courler pick up pa.yment or authorization for payment. In the OaBe oC debt relief services, the seller or telomarketer must. make the disolosures required by §310.3(aXl) before the conB1llJ1er en~ rolls In an offered program.

66() For offerll of conB1llJ1er credit producte subject to the Truth in Lending Act, 16 U.S.C. 1601 at seq., ILltd Regulation Z, 12 orn 226, complllLltCB with the disclosure requlremonts under the Tn.th In Lending Aot and Regula.tlon Z shall oonstltute complla.noe with §310.3(a)(1)(I) of this :Rule.

§31O.3

participating in the prize promotion with either instructions on how to participate or an address or local or toUfree telephone nllnlber to whicll customers may wr:I.te 'or oall for lnfonnation on how to participate;

(v) All.material costs or conditions to receive or redeem'a prize that is the subject of the prize promotion;

(vi) In the sale of a.ny goOds or seJ.'V~ ices represented to protect, insure, or otherwise limit a oustomer's liability in the event of unauthorIzed use of the Qustomer's credit card, the l1m1ts on a oardholder's liability for una.uthorized use of a oredIt card pursuant to 15 U.S.C.1643;

(vii) If the offer includes a negative option feature, all material terms and conditions of the negative option fea~ ture, :Including, but not limited to, the fa.ct that the customer's acoount w1ll be charged unless the oustomer ta.kes an affirmative action to avoid the charge(s), the date(s) the charge(s) will be submitted for payment, and the s):lBaUla steps the customer must tako to avoid the oharge(s); and

(viii) In the sale of any debt relief servioe:

(A) the amount of time neceasary to aohieve the represented results, and to the e,..t;ent that the service ma.y include a settlement offer to any of the cus~ tomer's ct'editors or debt oollectors, the ·time by which the debt relief seJ.'Vice provider will make a bona. fide settlement offer to eaoh of them;

(B) to the extent that the service IJlay inolude a settlement offer to any of the customer's oreditors or debt 001-lectors, the amount of money or the percentage of eaoh outstanding debt that the customer must aocumulate be-' rore the debt relief service provider \'1111 make a bona. fide settlement offer to each of them;

(0) to the extent that any aspect of the debt relief service relies upon or results in the customer's failure to make timely payments to oreditors or debt collectors, that the use of the debt te· lief service will likely adversely affeot the oustomer's creditworthiness, may result in the oustomer being subject to collections or sued by creditors or debt collectol'll, and may inorea.se the amount of money the customer owes

365

Page 4of14



§310.3

due to the accrual of fees and :Interest; and

(D) to the extent tha.t the debt relief servioe requests or requIres the (IUStomer to place funds in an account at an illllured financial institution, that the qustomer owns the funds held in the account, the oustomer ma.y withdraw from the debt relief service at any time without penalty, and, if the customer Withdraws, the customer must reoeive all funds in the account, other than funds earned by the debt relief service in compliance with §310.4(a)(5)(1)(A) through (0). ,

(2) Misrepresenting, rurectly or by implication, in the sale of goods or services any of the followlng material informa.tion:

(i) The total costs· to purchase, receive, or use, and the quantity of, any goods or serviCBS that are the subjeot of a sales offer;

(il) Any material restrIction, limitation, or condition to purClu!.SB, receive, or use goods or services that are the subject of a sales offer; .

(iii) Any material aspect of the performance, efficacy, nature, or central charact.eristics of goods or services that are the subject of a sales offer;

(iv) Any material aspect of the nature or terms of the seller's reftmd, cancellation, exchange, or repurchase policies;

(v) Any material aspeot of a prize promotion including, but not limited to, the odds of being I;l;ble to receive a prIze. the nature or value of !J, prize, or that a purchase or payment is .required to wIn a prize or to partioipate in a prize promotion;

(vi) Any material aspect of an investment opportunity including,but not limited to, risk, liquidity, earnings potentIal, or profitability;

(vii) A seller's or telemarketer'a affiliation with, or endorsement or sponsorship by, any perSOD or government entitY;

(viii) That any oustomer needs offered goods or servIoes to provide protectlollll a customer. already has pursuant to 15 U.S.C. 1643;

(IX) Any material aspect of a. negative option feature including, but not limited to, the fact tha.t the customer's acoount will be clu!.rged unless tbe oustomer takes an affirmative action to

16 CFR Ch.i (1-1-11 Edition)

avoid the charge(s), the date(s) the charge(s) will be submitted for payment. and the specific steps the cust.omer must take to avoid the charge(s); or

(x) Any material aspect of any debt relief service, including, but not lim· ited to, the ar;nount of money or the percentage of the debt amount that a oU6tomer may save by using suoh service; the amount of time necessary to achieVe the repreeented resulte; the amount of money or the percentage of each outstanding debt tha.t the customer must acoumulate before the provider of the debt relief eervice will initiate attempts with the oustomer's oreditors or debt colleotors or make a bona fide offer to ·negotiate, settle, or modify the terms of the olliltomer's debt; the effeot of the servioe on a OUStomer's oreditworthiness; the affect of the servioe on colleotion efforts of the customer's creditors or debt colleotorsj the percentage or numOOr of oustomers who attain the represented results; and whether a debt relief service is offered or provided by a non-profit entit:v.

(3) Oausing billing information to be submitted for payment, or collecting or attempting to oollect payment for goods or servioes Or a charitable con· tribution, direotly or inrureotly. with~ out the oustomer's or donor's express verifiable authorization, exoept when the method of payment uBed is a. credit oard subjeot to protections of the Truth in Lendjng Aot and Regulation Z,661f~ or a debit card subject to the protections of the :Elleotronic Fund Transfer Aot and Regulation E.662fS Such authorization shall be deemed verifiable if any of the followIng means is employed:

(i) Express written a.uthorization by the customer or donor. which inoludes the oustomer's or donor's signature;663{ s

681 Truth in Landing Aot, 15 U.S.O. 1601 at seq., a.nd Regulation Z, 12 OFR part 226.

G62 Electronio Fund 'I'ra.nsCel' Act, 15 U.S.O. 1693 at seq., and Regulation E, 12 OFR part 205.

S6S For purposes ot this Rule. the term "sIgnature" shall include an electronio or digital form of Bignature, to the extent that ouoh torm Of olgnature is l'ooognlzmj as a valid Signature under applicable federal law or state oontraot la.w.

366

Page 50f14


APPENDlXA Telemarketing Sales Rule

Federai Trade Commission

(li) ExPress Ol:al a.uthorization which is audio-recorded and made available upon request to the oustomer or donor, and the customer's or donor's bank or other billing entity, and whioh evidenoes clearly both the oustomer's or donor's authorization of payment for the goods or services or cbaritable contribution tbat are the subject of ~he telemarketing transaotion and the oustomer's or donor's reoeipt of all of the following information:

(A) The number of debIts, oharges, or payments (if more than one);

(2) The date(s) the debit(s), oharge(s), or payment(s) will be sub-mitted for payment; .

(0) The amount(s) of the debit{s), oharge(s), or payment(s);

(D) The oustomer's or donor's name; (liD The cUl!tomer's or donor's b1ll1ng

information, identified with Buffioient speoifioity such that the customer or donor understands what ac.oount will be used to collect payment for the goods or servioes or charitable oontrIbution that fLl'e the subjeot of' the telemarketing transaotlon;

(F) A telephone number for oustomer or donor inquiry that,is answered during normal business hours; and

(G) The date of the oustomer's·or donor's oral authorization; or

(ill) Wrltten oonfirmation of the transaction, identified in a clear and oonaplououll manner as suoh on the outside of the envelope, sent to the customer or donor via first class mail prior to the Bubmission for payment of the customer's or donor's billing information, and that includes all of the information oontained in §§310.3(a)(3)(11)(A)-(G) and a clear and conspicuous statement of the prooedures b:y which the customer or donor can obtain a refund from the seller or telemarketer 01' charitable organization in the event the con:i'irma.tion is inacourate; provided, however, that this means of authorization shall not be deemed verifiable in instances in whioh goods or services are offered in a transaotion involving a free-to-pay conversion and pre acquired account information.

(4) Making a false, or misleading statement to induce any person to paY' for goods or services or to induce a charitable contribution.

§3W.3

(b) Assisting ana facilitating. It is a. deceptive telemarketing act or practice and a violation ot this Rule for a person to provide sUQstantial Malstanoe or support to any seller or telemarketer when that person knowa or oonsciously avoids knowing that the seller 01' telemarketer is engaged in any act or practic!'! that violates §§310.3(a), (c) or (d), or § 310.4 of this Rule.

(c) Credit card laundering. Except as expressly permitted by the applicable credit card system, it is a deceptive telemarketf,ng aot or practice and a violation of this Rule for: .

(1) A merchant to present to cr deposit into, or oause another to present to or deposit into. the oredit card sya-. tem for payment. a oredit card sales draft generated by a telemarketing transaction that is not the result of a telemarketing oredit oard transaotion between the cardholder and the merohant;

(2) Any person to employ, solicit, or otherwise cause a merchant, or an employee, representative, or agent of the merohant, to present to or deposit Into the credit card system for payment, a credit oard sales draft generated by a telemarketing transaotion that is not the result of a. telemarketing oredit card transaction between the cardholder and the merchant; or

(3) Any person to obtain aocess to the credit oard system through the use of a business relationship or an affiliation with a merohant" when suoh aocess is not authorized by the merchant agreement or the applicable credit oard,syetem.

(d) Prohfbftecl deceptive acts or practices in the solfcttat1on of charitable contributions. It is a fraudulent obaritable solioitation, a deceptive telemarketing act or praotioe, and a violation of this Rule for any t81emarketer solioiting charitable contrlbutions to mierepresent, direotly or by implication, any of the follOwing material informatIon:

(1) The natute, -purpose, or mission of any entity on behalf of which a oharitable contribution is being requested;

(2) That any oharitable contribution Is tax deductible in whole or in part;

(3) The purpose for which any charitable oontribution will be used;

(4) The percentage or amount of any charitable oontribution that will go to

367

Page 6 of 14



§31O.4

a . charitable organiza.tIon or to any particular charitable progrll.l'll:

(5) Any material aspect 'of a prize promOtion including, but not iimited to: the odds of being able to receive a. prIze; the nature or value of a prize; or that a charitable contribution Is required to win a prize or to participate in a. prize promotion; or

(6). A charitable organization's or telemarketer's affilia.tion with, or endorsement or sponsorship by, any person or government entity.

§ 310.4 Abusive telemarketing acts or . pl'satices.

(a) Abusive conduct genemliy. It is an abusive telemarketing a.ot or praotioe and a violation of this Rule .for any seller or telemarketer to engage in the follOwing conduct:

(1) Threats, intimidatIon, or the use of profane or obsoene language;

(2) Requesting or receivIng payment of any fee or consideration for goods or services represented to remove derqgatory information from, or improve. a person's credit history, aredit reoord, or credit rating until:

(i) The time frame in which the seller hasreprcsented all of the goods or services will be provided to that person has expired; and

(U) The seller has provided the person with documentation in the· form of a oonsumer report from a. OOIlSUlIler reportingagenoy demonstrating that the promised results have been e.ohieved, suoh report having been issued more than six mont;ha after the results were aohIeved. Nothing In this Rule should be construed to affect the requirement in the Fair Credit Reporting Act, 15 U.S.C, 1681, that a oonsumer report may only be obtained for a specified permisSible purpose; .

(3) Requesting or receiving payment . of any fee or oonsideration from a ;per

son for goods or services represented to reoover. or otherwise assist in the return o{ money or any other item of value Paid for by, or promised to, that person in a previous telemarketing transaction, until seven (7) business days after such money or other item is delivered to that person. '!'his provision shall not apply to gooda or aervicBs provided to a peraon by a licensed at-torney; .

16 CFR Ch.1 (1-1-11 Edition)

(4) Requesting or receiVing payment of any fee or oonsideration in advance of obtaining a loan or other extension of credit when the seller or telemarketer has guaranteed or represented a high likelihood of suocess in obtaining or arranging a loan or other extension of credit for a person;

(5) (i) Requesting or receiving payment of any fee or consideration for any debt relief service until and unless:

(A) The seller or telemarketer has renegotiated, settled, reduced, or otherwise altered the terms of at least one debt pursuant to a .settlement agreement, debt management plan, or other suoh valid contraotual agreement executed by tb.e customer;

(B) The customer has made at least one payment pursuant to that settlement agreement, debt management plan, or other valid contractual agreement between the customer and thll creditor or debt collector; and

(0) To tb.e extent that debts enrolled in a servioe are renegotiated, settled, reduced. or otherwise altered individually. the fee or consideratIon either:

(1) Bears the same proportional relationship to the total fee for renegoti~ atIng, settling, reducing, or altering the terins of the entire debt balanoe as the individual debt amount bears to the entire debt .amount. The individual debt amount and the entire debt amount are those owed at the time tb.e debt was enrolled in the service; or

(2) Is a percentage of the amount saved as a result of the renegotiation, settlement, reduction, or alteration. The percentage charged oannot change from one individual debt to another. The amount saved is the difference between the amount owed at the time tb.e debt was enrolled in the servioe and the amount actually paid to satIsfy the debt .

(11) Nothing in § 310.4(a)(5)(I) prohibits requesting or reqUiring the customer to place {unda in an account to be used for the debt relief provider's fees and for payments to creditors or debt collectors in conneotion with the renegotiation, settlement, reduction, or other alteration of the terms of payment or athot' torme o£·a. debt, provided tha.t:

(A) The funds are held in anacoount at an insured financial institution;

368

Page 7 of14


" .. ~~



(B) The cuatomer owns the funds held in the account and is paid aoorued interest on the a.coount, j.f any;

(0) The entity adminis:tering the ao-· count is not owned or controlled by, or in any way a,ffillated with, the debt relief service;

(D) The entity administering the account does. not give ,or aocept any money or other compensation in exchange for referrals of business involving the debt relief service: and·

(E) The customer may withdraw from the debt relief service at any time without penalty, and must receive all funds in the aooount, other than funds earned by the debt relief servioe In oompliance with §Sl0.4(a)(5)(i)(A) through (0), within seven (7) bUSiness days of the customer's request,

(6) Disclosing or receiving, for con.slderation, unenorypted oonsumer aocount numbers for use in telemarketing; :prbvided, however, that this paragraph shall not apply to the disolosure or reoeipt of a customer's or donor's billing information to ];lrooeils a payment for goods or servioes or a charitable contribution pursuant to a trausaction;

(7) Oausing billing information to be submitted for payment. directly or indirectly, without the express informed consent of the customer or donor. In any telemarketing transaction, the seller or telemarketer must obtain the express informed consent of the oustomer or donor to be oharged for the goods or services or oharitable oontribution and to be charged using the identified aooount. In any telemarketing transaotion Involving preacquired acoount information, the requirements in paragraphs (a,)(6)(i) through (11) of this seotion must be met to evidence express informed consent. .

(1) In any telemarketing transaction involving preacquired account information and a free-te-pay conversion fea-' ture, the seller or telemarketer must:

(A) Obtain from the customer, at a minimum, the last four (4) digits of the acoount number to be charged;

(B) Obtain from the customer his or her express agreement to be oharged for the goods or services and to be charged using the aooount number pursuant to paragraph (a)(6)(i)(A) of this seotion; and,

§310A

(0) Make and maintain an audio reoording Of the entire telemarketing transaction.

(11) In any othe:;; telema:;;katlllg transaction involving preaoquired account Information not desoribed In paragraph (a)(6)(1) of this sectlon, the seller or telemarketer must:

(A) At a minimum, identify the acoount to be charged with suffioient speoifioity for the oustomer or donor to understand what aooount will be charged: and

(B) Obtain from the customer or donor his or her express agreement to be oharged for the goods or services and to be charged using the acoount number identified pursuant to paragraph (a)(6)(ll)(A) of this Election; or

(8) Failing to transmit Or cause to be transmitted the telephone number, and, when made available by the telemarketer'S oarrier, the name of the telemarketer, to any oaller identifioation servioe in use by a reoipient of a telemarketing call; provided that it shall not be a. violation to substitute (for the name and phone number used in, or billed for, making the oall) the name of the seller or charitable oJ)ganization on behalf of whioh a telemarketing call is placed, and the seller's or charitable organization's customer or donor service telephone number, whioh is answered during regular business hours.

(b) Pattern of calls. (1) It is an abusive telemarketing aot or practice and a violation of this Rule for a telemarketer to engage in, or for a Bellar to oause a telemarketer to engage in, the following conduct:

(1) Oausing any telephone to ring, or engaging any person in telephone conversation, repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number;

(ll) Denying or interfering in any w~, directly or indireotly, with a peraon's right to be placed on any registry of names and/or telephone numbers of persons who do not wish to receive outbound . telephone calls established to oomply with § 310.4(b)(1)(iii):

(iii) Initiating any outbound talephone call to a person when:

(A) That person llreviously has stated that he or she does not wish to receive an outbound telephone call made by or

369

Page 8 ofl4



§310.4

on behalf of the· seller whose goods or services are b·eing offered or made on behalf of the charitable organization for which a oharitable oontribution is being solioited; or .

(B) That person's telephone number is on the "do-nat-call" registry, maintainedby the Commission, of persons who do not wish to receive outbound telephone calls to induce the purchase of goods or services unless the seller:

(i) Has obtained the express agreement, in wrl.ting, of suoh :person to place oalls to that :person. Suoh written agreement shall olearly evidenoe such person's authorization that oalls made by or on behalf of a specifio party may lie placed to that person, and shall :inolude the teleP1!-one nun.iI;Jerto whioh the calls may be placed and the signature664/:5: of that person; or

(li) Has an established bUsiness relationship with suoh :person, and that :person has not stated that he or she does not wish to reoeive outbound telephone calls under paragraph (b)(l)(iii)(A) of thisBBotion; or

(Iv) AbandoDing any outbound telephone call. An outbound tele:phone call Is "abandoned~ under this seotion if a person answers it and the telemarketer does not oonnect the call to a sales representatIve within two (2) seconds of the person's completed greeting.

(v) Initiating any outbound telephone call that delivers a prerecorded message. Other than a prereoorded message permitted for com:pliance with the call abandonment safe harbor in §310.4(b)(4)(111), unless:

(A) In any suoh oall to induce the purchase of any good or service, the seller bas obtained from the reoiplent of the call an express agreement, in writing, that:

(i) ·The seller obtained only after a olear and conspiouous disolosure that the pur:pose of the agreement is to authorlze the saller to place prereoorded calls to such person;

(ii) The seller obtained without requiring, direotly or indireotly, that the

66f For PUl']loses of this Rule, the term "s1gnn.ture" shall includo an eleotronio or dIgItal form of signature, to the extent that such form of signature Is recognized as a valid signature under applioable federal law or state contract law.


agreement be executed as a conditIon ofpurohaslng any gpod or service;

(iii) Evidences the willingness of the recipient of the call to receive oalls that deliver prereoorded messages by or on behalf of a specific seller; and

(Iv) Inoludes such person's telephone number and signature;B85/s and

(B) In any such call to induce the purchase of any good or service, or to induce a oharltable oontrlbution from a member of, or previOUS donor to, a nonprofit oharitable organization on whose behalf the call is made, the seller or telemarketer:

(1) Allows the telephone to ring for at least fifteen (15) seconds or four .(4) rings befol'() disconnecting an un&n-swered. call; and .

(li) WitlUn two {2} seconds after the oompleted greeting of the IIBrson called, plays a :prerecorded message that promptly provides the disclosures reqUired by §310.4{d) or (e), followed immediately by a disclosure of one or both of the following:

(A) In the case of a. call that could be answered :In person by a constilller, that the person called can use an automated interactive voioe andlor keypress-activated opt-out mechanism to assert a Do Not Call request pursuant to §310.4(b){1)(lli)(A} at any time during the message. The mechanism must:

(1)" Automatically add the number called to the seller's entity-specifio Do Not Oalllist;

(2) Once invoked, immediately disoonnect the call; and

(3) Be available for use a.t any time during the message; ·and

(B) In the case of a call .that could be answered by an answering maohine or voioE.lmail service, that the' person called can use a toll-free telephone number to assert a Do Not Call request pursuant to §310.4(b)(1)(111)(A). The number provided must connect directly to an automated interactive voice or keypress-activl),ted opt-out mechanism that:

... For purposes oC this Rule, the tenn "signature" ahallmolude an eleotronio or digital form or signature. to the extent that suoh Conn of Signature is reoognized as a. valid signature under applicable federal law 0)' sta.te contract Jaw .

. 370

Page 9 of!4




(1) Automatically adds the number caJled to the seller's entity-specific Do

,Not Call list; (2) L-nmediatelythereafter dis

conneots the call; and (3) 1B accessible at any tIme through

out the duratIon of the telemarketing campaign; and

(iii) OompUe:;! with a.]l other requirements of this part and otber applicable federal and state laws.

(0) Any call that complies with all a.pplioable requirements of this para.graph (v) shall not be deemed to viola.te § 310.4(b)(1)(iv) of this part.

(D) This paragraph (v) sba.ll not apply to any outbound telephone call that delivers a prerecorded hea-ltheare message made by, or on behalf of, a. covered entity or its business assooiate, as those terms are defined in tbe IllP AA Privacy Rllie, 45 OFR 160.103.

(2) It is an abusive telemarketing aot or praotioe and a. violation of this RUle for any person to sell, rent, lease, purchase, or use any list established to comply with §310.4(b)(1)(iti)(A).· or maintained by the Commission pursuant to §310.4(b)(1)(iii)(B), for any purpose exoept oomplianoe with the provisions of this Rule or otherwise to 1)revent telephone calls to telephone numbers on such lists.

(3) A seller or telemarketer will not be liable for violating § 3l:0.4(b)(1)(ii) and (iii) if it can demonstrate that, as part of the -seller's or telemarketer's routine bUlllness practice:

(1) It haa established and implemented written :prooedures to comply with §310.4(b)(1)(ll) and (iii):

(ii) It has trained its personnel, and any entity assisting in its oompliance, in the procedures .established pursuant to § 310.4(b)(3)(1);

(iii) The seller, or a telemarketer or another person acting on behalf of the seller or charitable organization, lIas maintained and reoorded a list of telephone numbers the seller or charitable

-organization may not contaot, in oom-plianoe with § 310.4(b)(1)(111)(A);

(iv) The seller or a. telemarketer uses a prooess to prevent telemarketing to any telephone number on any list established pursuant to §310.4(b)(3)(iii) 61' 310.4(b)(1)(iU)(B), employing a. version of the "do-not-can" registry obtai'ned from the Oommisslon no more than

§310.4

thirty-one (31) dayS prior to the date' any call i8 made. and maintains records dooumenting this prOCel)8;

(v) The seller or a telamarkatar or another person acting on behalf of the seller or oharitable organization, monitors and enforces compliance with the procedures established pursuant to § 310.4(b)(3)(i): and

(vi) Any subsequent call otherwise viola.ting § 310.4(b)(1)(11) or (Ui) is the resUlt of error.

(4) A seller or telemarketer will not be liable for violating §310.4(b)(1)(iv) if:

(1) The seller or telemarketer employs teohnology that ensures abandonment of no more than three (3) percent of all calls answered by a person, measured over the duration of a single calling campaign~ if less than 30 days, or separately over each sucoeasive 30-day period or porMon thereof that the campaign oontinues,

(ii) The seller or telemarketer, for each telemarketing 011,11 plaoed, allows the telephone to rIng-for at least fifteen (15) seconds or four (4) rings before disoonneoting an unanswered call;

(iii) Whenever a sales representative is not available to speak with the person answering the oall' wi thin two (2) seconds after the person's completed greeting, the seller or telemarketer promptly plays a ·recorded message that states the name and telephone number of the seller on whose 1;Jehalf the call was :pla.ced6l!6/S; and

(iv) The seller or telemarketer. in accordance· with §310.5(b)-(d), retains records establiShing compliance with § 31O.4(b)(4)(1)-(lU).

(0) Ca/liny time restrictions. Without the prior consent of -a person, it is an abusiVe telemarketing aot or pra.otice and a violation of this Rule for a telemarketer to engage in outbound telephone oalls to a person's residenoe at any time other than between B:OO a.m. and 9:00 p.m. local time at the oalled person's location.

(d) RBquired oral disclosures in the sale oj goods or services. It is an abusive telemarketing aot or practice and a violation of this Rule for a telemarketer in

666 This provision does not a.ffeot any aoIler'l! or telemarketer's obligation to comply with relevant att1.te And reder,,} I1>WB. including but not limited to the TCPA, 47 U.S.C. m, ancl47 CFR part 64,12.00.

371

Page 10 of14



§310.5

an outbound telephone call or internal or external upsell to induce the purchase of goods or services to fail to disclose truthfully, promptly, and in a clear and conspicuous manner to the person receiving the oall, the following information:

(1) The identity of the seller; (2) That the purpose of the call is to

sell goods or services; (3) The Dature of the goods or servo

ices; and (4) 'l'11at DO purchase or payment ia

necessl\.rY to be able to win a prize or P!\.rticipa.te jn a prize promotion if a prize promotion is offered and that any purchase or payment will not increase the person's chances of winning. Tbi3 disclosure must be made before or in conjunction with the desoription of the prize to the person oalled. Ifrequeated by that person, the telemarketer must disolose the no-purchaselno-payment entry method for the prize promotion; provided, .however, that, in any internal upsell for the sale of goods or slilr.Vices, the seller ortelemarketer must provide the disclosures listed in this section only to the extent that the information in the upsell differs from the disolosures provided in the iliitial telemarketing transaction.

(e) Required oral disclosures in charitable solicltatlons. It is an abusive telemarketing Bot or praotIoe and a viola.tion of this Ru1e for a telemarketer, in an outbound telephone oall to .induce a o1iaritablecontribution, to fail to disolose truthfully, promptly, and in a clear and oonspiouous manner to the parsol). reoeiving the oall, the following informatlon:

(1) The identity of the oharitable or· ganizatIon on behalf of which the request Is being made; and

(2) That thll purpose of the oall is to solicit a oharitable oontribution.

§310.6 Reoordkeeping requirements. (a) A:ny seller or telemarketer shall

keep, for a. period of 21 monthBfrom the date the record is produced, the following records relating to its telemarketing a.ctivities:

(1) All substantIally different adver-tising, brochures, telemarketing scripts, and promotional materials;

(2) The name and last known address of each prize reCipient and the prize

16 CFR Ch.1 (1-1-11 EdHlon)

awarded for prizes that are represented, direotly or by implication, to have a. value of $25.110 or more; .

(3) The name and last known address of each oustomer, the goods or services purchased, the date such goods or services were Shipped or prOvided, and the amount paid by the oustomer for the goods or servloes;667/::;;

(4) The name, any fIotitious name used, the last known home addreBS and telephone number, and the job title(s) for all oUlTent and former employees directly involved in telephone sales or solicitations; provided, however, that if the seller or telemarketer permits fio. titious names to be liSed by employees. eaoh fiotitious name must be traceable to only one speoifio employee; and

(5) All verifiable authorizations or records of eXlJress informed oonsent 0 . .1.' express agreement required to. be provided or reoeived under this Rule.

(b) A seller or telemarketer may keep the records required by § 310.5(a) in any form, and in the same manner, format, or place as they keep such records in the ordinary cours.e of bl,lsiR

ness. Failure to l!:eep aU records reM quired by § 310.5{a) shall be a violation of this Rule.

(0) The seller and the telemarketer calling on behalf of the seller may, by written agreement, allocate responsibility between themselves for the reeordkeeping required by this Section. When a seller and telemarketer have entered into such an agreement, the terms of that agreement shall govern, and the seller or telemarketer, as the oase may be, need not keep recorda that duplicate thoBe of the othel'. If the agreement is unolear as to who must maintain any required record(s), or if no such agreement exists, the seller shall be responsible for oomplying with §§310.6(a.)(1)-(3) and (5); the telemarketer shall be responsible for oomplying with § 310.5(a)(4).

(d) In the event of any dissolution or ternllnation of the seller's or telemarketer's business, the principal of

WI For offers of consumer credit products Bubject to the Truth 1n Lending Aot. 15 U.S.O. 1601 et seq., and Regula.tion Z. 12 CF.R. 226, oomplianoe with the reoordkeeplng reQ.uirements under tho Truth in Lending Aot, and :Regulation Z, sball constitute compliance with § 310.5(a.)(3) of this Rule.

372

Page 1 I of 14


· APPENDIXA Telemarketing Sales Rule


that aeller or telemarketer shall maintain all records as required under thia section. In the event of any sale, asSignment, or other change in ownership of the seller's or telemarketer's business, the successor business shall maintain all records required under this section.

§310.6 Exemptions. (a.) Solioitations to induoe charitable

contributions via outbound telephone calls . are not covered by §310.4(b)(1)(1ll)(B) of this Rule.

(b) The following acts or practices are exempt fr(lm this Rule:

(1) The sa.le of pay-per-call services subjeot to the Commission's Rule entitled "Trade Regulation RUle Pursuant to the Telephone Disclosure and Dispute Resolution Act of 1992," 16 CFR Part 308, provided, however, that this exemption does not apply to the requirements of §§310.4(a)(1), (a)('7), (b), and (c);

(2) The sale of franchises subject to the Commission's Rule entitled "Disclosure Requirements an(l. Prohibitions Concerning Franohising," ("Franchise Rulen) 16 OFR Part 436, and the sale of business opportunities subject to the COmmission's Rule entitled "Disclosure Requirements and Prohibitions Conoerning Business Opportunities," .("Business Opportunity Rule,,) 16 CFR Part 437. provlded, however, that this exemption does not apply to the requirements of §§310.4(a)(1), (a)(7), (b), and (0);

(6) Telephone oaUs In which the sale of gooM or services or cha.ritablesolioitation is not (lompleted,'!LIld payment or authorization of payment is not required, until after a face-to-faoe sales or donation presentation by the seller or charitable organization,. provfded, however, that this exemption does not apply to the requirements of §§ 310.4(a.)(1), (a)('1), (b), and (c);

(4) Telephone oalls initIated by a customer or donor that are not the result of any SOlicitation by a seller, charitable organization, or telemarketer. provided, however. that. this exemptIon does not apply to any instances of upselling included in such telephone ca.llS·

(5) Telephone calls initiated by a customer or donor in response to an adver-

§310.7

tisement through !LIly medium, other than direct mail solicitation, provided. however, that this exemption does not apply to calls initiated by a oustomer or donor in response to an advertisement relating to investment opportunities, debt relief services, business opportunities other than business arrangements covered by the Franohise .Rule or Business Opportunity Rule, or advertisements involving goods or services described in §§ 310.3(a)(1)(vi) or 310.4(a)(2}-(4); or to any instances of upselling inoluded in suoh telephone calls;

(6) Telephone oallS initia.ted by a customer or donor in response to a direot mail solicitation, including solicitatIons via the U.S. Postal Service, facsimile tranSmiSSion, eleotronic matI, and other similar methods of delivery in which a solicitation is directed to sp.eoifio addressees) or person(s), that clearly, conspiouously, and truthfully discloses all material information listed in §310.3(a)(1) of this Rule, for any goods or services offered in the direct mail solicita.tion, and that contains no material misrepresenta.tion regardIng any item contained in §310.B(d) of this Rule fQr any requested charitable contribution; provfded, however, that this exemption does not apply to calls initiated by a oustomer in response to a direct ma.l.l solicitation relatIng to prize promotions, investment opportunities, debt reUe! services, business opportunities other than business arrangements covered by. the Franchise Rule or Business Opportunity Rule, or goods or services described in §§310.3(a)(1)(vl) or 310.4(a)(2)-(4); or to any instancefl of upselling included in such telephone calls; and

(7) Telephone calls between a telemarketer !LIld any bUSiness, exoept calls to induce the retatl sale of nondurable offioe or oleaning supplies; provfded. however, that §310.4(b)(I)(iii)(B) and §310.6 of this Rule shall not apply to sellers or telemarketers of nondurable offioe or oleaning supplies.

§:nO.7 ActioDs by states and private persons.

(a) Any attorney general or other officAr of a state authori2:ed by the state to bring an action under the TelemarketIng and Oonsumer Fraud and

373

Page 12 of14



§310.8

Abuse Prevention Aot. and any private person who brings an aotion under that Aot. shall serve written notioe of it!! aotion on the Oomm1Bslon. if feasible, prior to its initiating an aotion under this Rule. The notIce sha.ll be sent to the Office of the Direntor, Bureau of Clonsumer Protection. Federal Trade Commission, Washington, DO 20580, and shall inolude a oopy of the state's Or private person's complaint and any other pleadings to be filed with the court. If prior notice is not feasible, the state or private person shall serve the Commission With the required notice immediately upon InstItuting its action.

(b) Nothing con~ained in this Section shall prohibIt any attorney general or other authOrized atate official from proceeding in state court on the basis of an alleged violation of any nivl1 or criminal statute of such state.

§SlO.8 Fee for BcceBB to the National Do Not Call Registry. .

(a) It is a violation of this Rule for any seller to initiate, or cause any telemarketer to initiate. an outbound telephone call to any person whose telephone number is within a given area. code unless, suoh seller, either directly or through another person, first has paid the annual fee, required by §310.8(c), for access to telephone numbers within that area. code that are included in the National Do Not Call -Registry maintained by the Oommission under §310.4(b)(1)(iii)(B); provided, however, that Buoh payment Ie not necessary if the seller initia.tes. or caUSeS a telemarketer to initiate. ca.lls solely to persons pursuant to §§310.4(b)(l)(l11)(B)( 1 ) .01' ( 11 ), and the seller does not access the National Do Not Call Registry for any other purpose,

(b) It Is a violation of this Rule for any telemarketer, on behalf of any seller, to initiate an outbound telephone

.oall to any perSOn whose telephone number is within a given area code unlass that seller. either directly or through another person. first has paid the annual fee, required by §310.8(c), for access to the telephone numbers within that a.rea oode that are included in the National Do NotCa.ll Registry; provided, however, that Buoh llayment


is not necessary if the seller initiates, or oauses a telemarketer to initiate. calls solely to persons pursuant to §§310.4(b)(1)(iii)(B)( i ) or ( ii ), and the seller does not access the National Do Not Oall Registry for any other purpose.

(c) The annual fee, which must be paid by any person prior to obtaining acoess to the National Do Not Oa11 Registry, is $5fi for each area code of data. a.ooessed, up to a maximum of $15.058; provided,· however. that there shall be no oharge to any person for accessing the first five area codes of data, and .provided further, that there shall be no oharge to any person engaging in or causing others to engage in out.. bound telephone calls to consumers and who is accessing area codes of data in the National Do Not Oall RegIstry if the person is permitted to acoess, but is not required to aocess, the National Do Not (jaIl Registry under this Rule. 47 CFR 64.1200, or any other Federal regulatIon or law. Any person accessing the National Do Not Oall Registry may not partioipate in any arrangement to share the cost of aocessing the registry, including any arrangement with any telemarketer or servioe provider to divide the costs to access the registry among various olients of that telemarketer or servioe provider.

(d) Each person who pays, either direotly or through another person. the annual fee set forth in §310.8(c). each person excepted under §310.8(c) from paying the annual fee, and eaoh person excepted from paying an annual· fee under §310.4(b)(1)(ll1)(B). will be provided a UIrlQue account number that will allow that person to access the registry data for the selected area codes at any time for the twelve month period begInning on the first day Of the month in whioh the person paid the fee ("the annual period"). To obtain access to additIonal area codes of data during the first six months of the annual period, eaoh person required to pay the fee under §310.8(c) must first pay $55 for each additional area oode of data not initIally seleoted. To obtain access to additional area codes of data during the second six months of the annual perlod. each person required to pa.y the fee under §310.8(o) must first pay $27 for eaoh additional area code of data

374

Page 13 of14


Federa[ Trade Commission

APPENDIXA Telemll{keting Sales Rule

not initially selected. The pa.yment of the additionai fee will permit the person to access the additional area codes of data for the remainder of the annual period.

(e) Access to the National Do Not Call Registry 1s limited to telemarketers. sellers, others engaged in or causing others to engage in telephone calls to consumers, service providers acting on behalf of such persons, and any government agenoy that has law enforcement authority. Prior to accessing th~ Na.tional Do Not. Call Reg.istry, a person must provide the identifying information required by the operator of the registry to collect the fee, and must oertify, under penalty of la.w, that the person is accessing the registry solely to comply with the provisions of tb1s Rille or to otherwIse prevont telephone calls to telephone numbers on the registry. :If the person is accessing the registry on behalf of se11-eJ,'s, that pereon also must identify each of the sellers on whose behalf it is accessing the registry, must provide each seller'S unique account number for access to the national registry, and must certify, under penalty of law, that the sellers will be using the information gathered from the registry solely to' comply with the provisions of this Rule or otherwir;e to prevent telephone calls to telephone numbers on the registry. [76 F.f!. 49516, Aug. 10, 2010; '1.5 FE 61934, Aug. 24.2010]

§SlO.9 Severability. The provisions of this Rule are sepa

rate and severable from one another. If any provision is stayed or determined to be invalid. it is the Commission's intention that the remaining' provisions shall continue In effeot.

375

§31l.3

Page 14ofl4

Date post:	25-Mar-2018
Category:	Documents
Upload:	dangnhi
View:	214 times
Download:	1 times

v. ORDER FOR PERMANENT Plaintiff, Attorneys for the … 3:12-cv-00105-LRH -VPC Document 3-1 Filed...

Documents